Everything is fine - we are all fine...how are you?

I do have short puts on ZS and CRWD. Not willing to risk long shares directly at this point through their earnings. I don’t plan on any position for S.

If S did have weekly options, I might be selling puts expiring next Friday- but since they don’t, I am feeling too risky for June 16 expiry play unless I want to go far OTM. But then that’s becoming a balance of opportunity cost of margin use- could I be making more money using that margin on another play. Because the more OTM you go the less profit of course.

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impressive YTD results for sure.

not being contrarian for sake of it, but market been fairly generous YTD, so whether you think of it as an extended BMR or a bull market, either way you may wonder if your strategy only works when market goes up.

But, hey, FOMO and MOMO are back in play. Big 7 leading the market and never ever ever falling again.

I am sure it will all be fine.

Dreamer

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@jonwayne235 Congrats on your YTD results. Very impressive and happy for you.
Lock in gains as you go along.
Document what is working and what is not working so that you can refine your system.
Take some time to celebrate.
Cheers!

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i think may be this is not time to sell and celebrate . looks currently some areas hot and some areas cold. may be switching money diff places and wait for movement to buy working very well. it looks we are about to start new cycle today or with in next 3 months so keeping cash might not work at this movement.

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Venumadi

I think you are right on target there…Absolutely seeing it happening live…Just look at what has happened to defensives and commodities in the last 1 month or so!! The rotation is/ has been happening, while the CNBC talking heads keep saying otherwise…But for sure, Dreamer is also right…When the rug pull comes, who knows!!! But the problem is…What is going to happen between now, and the rug pull???

Just look at what happened in May 2021 to Sept 2021…

If you are nimble, you might be able to do well…

I am neither nimble nor have the dough now (not unless I sell the BS i am bag holding).

But definitely enjoy seeing the positive vibe for a change!!

When Dreamer or Wendy or Arindam etc…jump in…You know you need to buy with every penny u have!!!

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Jon,

Congrats…You know, I initally did have a ton of doubts on SMCI…So, much so that I even put up a chart when it was only in $130s questioning it…But wow…

I just did some digging, and see what you and XMF Rob were raving about

What can I say, except…CONGRATS!!!

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Most stocks that go parabolic have an equally quick descent. If I owned any stock whose chart looked like that, I would get defensive, perhaps selling a deep in the money call 9 to 12 months out for at least half the position.

Jk

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Thanks @LifeOfDreamer
Indeed I would argue my returns and portfolio is constructed in a high beta fashion. I doubt there is significant true alpha going on. I do believe luck played a huge role. I was fortunate for example to have sold massive amounts of put premium while volatility was so elevated with the March bank collapse.
FYI, I respect your opinion in the market as I browse through your board here. 100% wish I listened to you guys last year

@BeachMan2115 thank you for your kind words! Always appreciate coming across your insights on the boards here.

@VENUMADI yes it does seem staying all cash may be unwise in the short term as the big institutions on the sideline experiencing FOMO and starting to chase more. Interesting market has brushed aside inflation report today and the whole debt limit thing.

@Inspired2learn thanks! i certainly wish I knew of SMCI back when it was <$130

I have NTNX and PSTG vibes when it comes to SMCI.
Although PANW has proved me otherwise, I have yet to find it profitable long-term (2-3+ years) to invest in a hardware infrastructure stock.

Think HPE, Cisco, NTAP, EMC/DELL…not sure if Lenovo trades publicly or not, but they are essentially the legacy IBM servers and laptop businesses.

SuperMicro might be currently playing up the AI/GPU-infused server angle, and apparently quite well, to the credit of their stock price. But SuperMicro is also known as the ultra-cheap white-box server. They are what companies buy when they don’t see inherent value in paying for the HPE or Dell “brand” and just think of servers as commoditized hardware. Which they are. Apparently SMCI was a supplier for many of the server OEMs and then started producing their own full systems (competing against their customers, so to speak). Being partly their own supply chain, they could roll out cheaper price tags on servers.

This is literally in the wheelhouse of my career in the IT channel, so I know what I am talking about.

Again - SMCI likely did a good job reinventing themselves and if the GPUs and secret sauce for AI/ML and HPC solutions in general had less to do with any software or added-value provided by the big server OEMs like Dell or HPE, then it makes sense to just use cheaper servers stuffed with NVIDIA GPUs like SuperMicro.

So I see this as a bit of a picks and shovels motion. Unlike NVDA though, which is really the most important part of the AI secret sauce (at least on hardware side of things), any hardware that the GPUs run on, whether in cloud or on-prem, are essentially a commodity.

I don’t see SMCI parabolic run ending well.
JNPR called…said it was told things were different back in 2000, too.

Dreamer

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Hi Jk,

Completely agree - I am a living example of that, although I never even knew the stocks that were “recommended” by the TMF were that category…

Anyways, the only issue is - If I were to buy these high fliers…If at all…Why do you take the risk of selling a deep itm call…especially if we feel that these can go all the way back to where they started?

If it is a solid stock, then sure by all means, makes a lot of sense to do that, if one has tax issues

But for any high flier/ momentum based investing -would you risk selling a long duration ITM call, however high the premiums are?

Wouldnt u be risking your prinicipal, although the premium certainly offsets the cost basis by a big amount

An example of a past trade. I bought ENPH a long time ago around six dollars a share, under prior management. It ran to over three hundred dollars per share. I sold a long dated call (Jan 23 @170) for one half of my position, and could buy it back for less than $170 today, having kept the entire premium as profit. This is one example of many when a stock you own rises very quickly, you can try to gain the premium in the inherent over valuation.
It obviously does not always work, but I was willing to lose one half of my position because it was so over valued.
Jk

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“And yet their valuation is higher by far than any of my other companies. Who needs that? I think I just have better places for my money.”

Never thought I’d read that out of Saul’s keyboard… yet still no discussion of valuation allowed on the forum.

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Hi Jk,

That’s awesome, congrats…In your case, it is a brilliant strategy as your cost basis was so low…and it had already made huge gains…and of course, it is likely going to be a winner going forward ( hopefully!).

If you felt it was very overpriced at $300, would it have made sense to sell at that high price, and wait for the dips to occur…Sure, you may have run the risk of the stock running away from you…but wouldn’t the same be true even when you sold a deep ITM covered call - if the stock suddenly ran away higher,

  1. you either have to let it go and buy another set, or
  2. BTC the call at a loss…or
  3. roll it to a higher price for a later date…

Option 1 and 2 are virtually no different to selling in the first place and waiting to buy back…

It is option 3 that I am not sure about - Is the ability to roll the main reason why you chose to sell the deep ITM covered call, even in case it ran away from you…

Thanks,
Charlie

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If the stock runs away higher, I am fine with that. The portion I sold was more than a fifty bagger in 7 or 8 years. The fact that I can buy it back for less than the called price is the critical piece of information. I kept all of the call premium as extra profit. It was a substantial amount. There are always alternatives to invest in that have better future prospects as well.
The key is moving capital from overvalued stocks to undervalued stocks, wait, rinse,
repeat. This generates increased returns over time. I really don’t like to sell, it is ,for me, the hardest skill to master of all. Much easier to identify companies I can understand and figure out approximately what they are worth than it is to sell.
Valuation matters!

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Nothing to see here. Move along, folks.

I am sure it will all be just fine.

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“Chicken or Beef? Chicken? Would you like that fresh or canned?”

Great! A new KPI, the chicken/beef ratio. Wonder how it correlates to put/call?

I will note that the comp.idx passed 13,000 at the open Tuesday, and managed to hold that level after losing it around 2 p.m. Actual 1-yr high is 13,181, intraday, with a 13,128 close. Tuesday it hit 13,154 and closed at 13,017. (Tha’t’s NASDAQ composite). I-yr low is 10,008. Triple-witching on June 16. I’m kinda nervous.

And, CRWD earnings AMC Wednesday. Pure Storage (PSTG), too. CRWD is 6.4% of port, up 34% (total, not ytd). UPST 3.2% of port and up 8%. Up 8% but I am stubborn. Data is new oil. AI needs data. PSTG is gaining market share. From Bert:

Pure is a specialist in storing unstructured data-that is really the raison d’etre for FlashBlade /E as the linked video shows: https://www.purestorage.com/products/unstructured-data-storage/flashblade-e.html".

PSTG up almost 7% Tuesday, so set up for a downer on earnings. For those of you not keeping score at home, UPST up 17% Tuesday. Portfolio up 11.7% YTD which is quite disappointing and underperforms just about everything I follow.

But, I’m fine, how you?

KC

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Doing well, thank you.

These companies have something to do with data: msft, snow, net

Do you like these companies?
snow and net are losing favor in some parts

I hope they don’t go to near zero, as is possible

Mostly,

I don’t follow MSFT, so can’t comment. NET, ditto. I do have SNOW. Had most of the position called away at $162.50. I did not buy it back under $150 for two reasons: 1) I felt no urgency and the aforementioned 13,000 on the NASDQ, and 2) EV/S is 19.5 compared to PSTG at 2.5.

I like Snowflake, the company. FCF is 25% and in absolute terms in growing very, very fast. (PSTG is 28%). SNOW is expensive. I am 83% invested and SNOW is still a half (2.4%) position so willing to have SNOW as a “hold”.

Sorry I can’t provide better detail/data. And, I continue to underperform.

EDIT: I just came across Saul’s EOM report, which I had been waiting for. Might as well add my comments here. Back in late September I made an OP on Why Hold Growth Stocks. At that time I made up a growth stock model which was an equal weight portfolio of the stocks that Saul owned at end of August. By end of 2022, that port was down 24% versus my up 9% so I felt that on relative performance that my thesis was correct. But, what about since then? That model portfolio is up 27.4% YTD versus my 11.8% and Saul’s actual up 6.3%. Saul would have been better off to have been long term buy and hold.

I notice that the SNOW and NET, two of the 3 stocks you mentioned, were dumped by Saul. SNOW was dumped because it is consumption based–not good compared to true leased SaaS. He did not mention valuation, though the unstated is that the high valuation makes SNOW vulnerable as revenue is not predictable. My thought is that this is trading. The consumption model is not news. Why will consumption not return? Perhaps the bloom is off the rose and the EV/S will not recover along with consumption return. As to NET, it was not dumped due to valuation per se, valuation not mentioned. 30% growth is not hyper but quite impressive nevertheless. I note that the 1 and 5 year median EV/S for NET are17.2 and 18 and the current is 17.9. [see EV/S - Cloudflare Inc (NYSE:NET) - Alpha Spread]. Note the 3 year median is 33.7 due to a peak of 94.4 in (of course) November '21. I can’t throw rocks or shake a finger, I was loaded with those stocks at that time. But, NET is up 50% in May. I assume that the EV/S of NET was as low as 11in May. Perhaps it was a time to buy, not sell. But in May, I was buying back UPST which purchases are up 139% and 92%–the entire position up 102%. Anyway, I don’t see NET as compelling and 17.9 is too expensive for me-although I have not studied the company/stock.

KC

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There is a thesis that I am in the process of framing up that…

Chips and software will be the true beneficiaries of the AI revolution.

Data, data providers, data management, data storage…etc…will get commoditized in this equation…that means SNOW, MDB, CFLT, ESTC, PSTG, LRCX, etc…

  • Storage always get cheaper with time
  • Databases have been getting commoditized ever since they were invented
  • ETL, data warehouses, data lakes etc. have usually been disrupted by easier to use platforms or cheaper to use solutions or both
  • And every one who is selling data at some point sees competition (new sources of the same data) grow

Still framing this thesis so that I can write about it to explain what I mean.

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Yep, will look forward to any specific, actionable ideas that you have.

What is your positioning now?

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